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Question
Is there such a thing as hiring someone at a minimum hourly wage and then offering additional pay based on a factor?

Alternative Question
Could this be done legally (from a US tax perspective) if I was hired as salary?

Example
A delivery driver is hired at minimum wage but is given an additional $5 for every delivery done during their shift. So a simple example where minimum wage is $8:

2 hours ($16) + 10 deliveries ($50) = $66

My Research
From my limited research it seems the way this is typically handled is to pay the normal hourly wage and everything else is reported as a bonus.

UPDATE / CLARIFICATIONS
I asked this question because there is a new business in town offering delivery drivers minimum wage an hour but they haven't decided how to handle excess profit. They charge a set delivery fee based on distance which on average means 3 deliveries an hour would pay my wage for that hour. The company wants to pay its drivers more and does not need the profits from the delivery side of the business. Their looking at offering bonuses or commissions right now and do not want to do the standard delivery driver thing where you earn $2 something an hour and are supposed to make the rest in tips.

Their willing to listen to suggestions right now so I'm really looking to offer them a suggestion that makes me more money (my taxes in mind) but also helps them out (their taxes in mind).

  • 1
    For example of this, see "commission" (a very popular incentive scheme for salespeople) – Ben Voigt Jun 19 '18 at 3:15
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You are thinking about commission and/or piece work:

Piece work (or piecework) is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed regardless of time.

but I offer this additional scenario.


When a truck driver is driving then they earn a certain cpm (cents per mile).

Once they arrive at their destination the some trucking companies will pay a flat rate ($3-$4 per hour) until they get back on the road.


A very similar scenario exists for flight crews because when they are in the air then they make their regular rate but if they are on the ground and away from their home station then they make severely less.


Have you ever ordered from GrubHub? Those drivers make an hourly rate for being ready and available and then they earn additional money for actually delivering food.

I am not sure if Uber operates in this exact way.

  • I have heard of GrubHub and I finally found this from a driver: "You will be paid per order + 0.50 cents per mile from the restaurant to the customer + 100% of your tips." This will not work in my situation, I'll update the question to explain more. – Blizzardengle Jun 19 '18 at 15:02
  • @Blizzardengle Sounds good. Your current question asks like three different things so it's difficult to figure out what you are focusing on. Payment negotiations can happen many different ways so the most basic answer is "Yes, you can have a regular rate of pay and earn extra from that same job/position". If you are specifically interested in how the taxes are handled then that is a beastly topic in its own right. – MonkeyZeus Jun 19 '18 at 15:10
  • I am interested in the tax side of things because I own my own business as well. Really though it seems like commissions is what I should suggest to them but that comes at a high price: 22% in taxes. – Blizzardengle Jun 19 '18 at 15:19
  • @Blizzardengle Well that complicates things further. Do you have employees? Are you operating as just an independent contractor? Do you receive a regular salary from your business? The cheapest tax-wise is to treat this as a business-to-business transaction so that the new business in town can just pay your business as an expense and then your business reports it as revenue. Once the money gets into your pocket then that's where taxes come into play. – MonkeyZeus Jun 19 '18 at 15:32
  • @Blizzardengle Is your business actually active in doing anything or is it just a name you've registered without a physical company/assets behind it? – MonkeyZeus Jun 19 '18 at 15:35
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Employers are free to come up with all sorts of compensation structures provided the employee's pay is not below whatever applicable minimum wage requirements exist.

There are many employers that will assign multiple pay rates to single employees, this is fairly typical of factory/production work. An employee might clock in to one position and switch roles mid shift at a different rate if they can also manage the floor between shifts and things like that.

On your note about bonuses:

Income being "reported" as a bonus is largely the boogyman. Maybe someone else will type out a more complete answer, there are many answers on this site dealing with annual tax filings. The gist of it is all your income derived in the year is income, whether it's regular salary, an hourly wage, a bonus, overtime whatever. The withholdings on bonus income is tricky for generally two reasons, it's not your regular pay so it's not predictable and, you will owe a penalty if you had less than 90% of your tax due withheld through the year. The moral of the story is that bonuses are not taxed at a higher rate, they just so happen to generally have a greater amount withheld.

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I worked for several years where I was paid two different rates based on the project I was supporting. One was a government contract, the other was a contract with a private company. The private company allowed my employer to charge a higher rate, and thus pay me a higher rate. The incentive for me was if all things were equal, I would work on the higher paying project.

It wasn't treated as a bonus, it just meant that my paychecks weren't flat, becasue the split of hours changed with each pay period. This did make it hard to fine tune my income tax estimation on my W-4.

when a company pays a bonus they have the option, they may even give the employee the option, to either treat it a regular income, and withhold it according to the tax tables. It can also be treated as a rare event and withheld at a flat 22% (This changed with the new 2018 tax law). In the end it doesn't impact your total taxes. It just impacts the withholding and then the refund amount.

One area it could make a difference is regarding benefits. They might fix the amount of your insurance, 401k, and other benefits on your base pay; and ignore the bonus/commission.

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